AviancaTaca Holding S.A. Records Net Profit of COP$101.04 Billion in the Third Quarter of 2012, up 14.8% on the Same Period in 2011

BOGOTÁ, Colombia—(BUSINESS WIRE)—AviancaTaca Holding S.A (BVC: PFAVTA) presents revenues for the third quarter of 2012. Financial and operational information is recorded in millions of Colombian pesos, except where indicated, and complies with the generally accepted accounting principles in Colombia (COLGAAP). The results shown are stated in Colombian pesos at the average exchange rate for each period. The average exchange rate had a revaluation of 0.22% in the third quarter of 2012, compared to the same period in 2011.

AviancaTaca Holding S.A. (“AviancaTaca”, “the Company”, “the Issuing Authority” or “the Issuer”) corresponds to figures and operational references of the consolidated entity.

2012 Third Quarter Highlights

In the third quarter of 2012, AviancaTaca reported revenues of COP$1.98 trillion, a 3.5% increase in comparison to the same period in 2011. Excluding the one-time adjustment of expired tickets reported in the third quarter of 2011, operating income increased 8.1%.

Operating profit for the third quarter reached COP$209.22 billion, 12% below the same period for the previous year, mainly due to the increase in fuel costs. Excluding the one-time adjustment for expired tickets in the third quarter of 2011, operating profit for the third quarter of 2012 increased 21.1%.

Excluding the one-time adjustment for expired tickets in the previous year, EBITDAR for the third quarter of 2012 increased 12.0%.
Net profit for the third quarter of 2012 was COP$101.04 billion, 14.8% higher than the net profit recorded for the same period in 2011.
Capacity, measured in ASK (Available seats per kilometer), increased 10.3% in the third quarter as a result of the ongoing growth and consolidation strategy of the four (4) hubs (Bogotá, Lima, San Salvador and San José in Costa Rica). The Company opened five (5) new routes during this period, along with additional flights to existing routes in South America.

Passenger traffic measured in RPK (Revenue passenger kilometer) rose 9.1% in the third quarter, whereas the load factor reached 81.8% for the third quarter of 2012.

Cost per available seat kilometer, excluding fuel costs (CASK ex Fuel), decreased 6%.

In compliance with its fleet renovation and modernization plan, AviancaTaca added five (5) aircraft to its fleet in the third quarter: one (1) Airbus A330, two (2) Airbus A319 and two (2) Airbus A320, whereas one (1) Airbus A319 was retired from service.

During this third quarter, the Company announced that it will be adopting the Avianca brand name for the group’s airlines starting in the first quarter of 2013.

MANAGEMENT COMMENTS ON THE THIRD QUARTER 2012 RESULTS

AviancaTaca’s third quarter 2012 financial results reflect the implementation of its integration, renovation and growth strategy, which began in early 2010. In line with the strategy, the Company incurred non-recurring costs during the third quarter which affected operating expenses and exceeded COP$11 billion.

Consolidated revenue in the third quarter increased 3.5% over the same period in 2011. It should be noted that there was a positive adjustment of COP$81.61 billion in the third quarter of 2011, due to the extraordinary recognition of revenue from expired tickets in TACA. This adjustment for Avianca took place in the fourth quarter of 2011. The increase seen in the third quarter of 2012 is mainly due to the growth in ticket sales, which increased 1.4%. This increase was driven by: 1. A 13.6% increase in passenger traffic, going from 5.4 million in Q3 2011 to 6.2 million; and 2. A decrease in average ticket fares due to the marketing strategies for Ecuador and domestic routes in Colombia.

AviancaTaca continued its market expansion strategy in Peru and Ecuador. The Company increased passenger numbers by 47.2% in Peru in comparison to the third quarter of 2011, whereas capacity has been streamlined in Ecuador, adjusting to new market conditions and increasing the market’s connectivity with the four hubs operated by the Company.

AviancaTaca opened the following routes in the third quarter of 2012: Bogotá-Yopal (14 flights per week), Salvador-Cali, Salvador-Guayaquil, Lima-Cali and Lima-Medellín. In turn, weekly frequency was increased on the following international routes: Bogotá-Madrid (3), Lima-Santa Cruz (4), Lima-Caracas (3) and Bogotá-Lima (1). Frequencies were increased on domestic routes, including Medellín-Cartagena (28), Medellín-Cúcuta (7), Bogotá-Medellín (10), Medellín-Cali (7) and Cali-Cartagena (+5).

The consolidated operating costs and expenses for the third quarter of 2012 rose by 5.7%, reaching COP$1.77 trillion, mostly due to higher fuel costs. Isolating the increase in fuel costs, total operating costs and expenses only rose 3.7%, in line with Company’s total revenue growth. This increase is primarily due to a 10.3% growth in operations measured in ASKs, the expansion programs (mainly in the domestic market in Peru) and non-recurring expenses for projects aimed at optimizing the Company’s maintenance and operating expenses.

Continuing with its fuel hedging policy, AviancaTaca hedged the equivalent of 30% of fuel consumption for the third quarter 2012. In addition, approximately 28% of estimated gallons to be used in the next 12 months were hedged as of September 30, 2012.

AviancaTaca reported operating profits of COP$209.223 billion for the third quarter 2012.